Queer case of Himachal Pradesh – rich government, poor people

Runaway expenditures and not enough revenues to match them has chief minister Virbhadra Singh knock yet again at the union finance minister PC Chidambaram’s door today for grant of Rs 2100 crore as special assistance in order to meet 2013-14 annual plan targets.

It was only in the last week of November that the chief minister was pleading with Prime Minister Manmohan Singh for release of 1972.08 crore as calamity relief for the mid-summer (June) snowstorm that struck Kinnaur. A case for special assistance was also presented

The union government that announced release of Rs 1000 crore to Uttarakhand for the weather calamity that hit the neighbouring state in the same storm cycle but the losses in Kinnaur, though acknowledged, have been totally ignored for relief funds by the center.

Every two to three months chief minister Virbhadra Singh flies down to Delhi, for in past 9 months he has met the prime minister three times, once with the entire state cabinet in entourage, but Delhi, with a bagful of problems of its own, has not found time to address the highlander’s problems.

Rich Himachal Poor Himachal: Image craft Ravinder Makhaik

A slowdown in the overall economy has impacted the central pool of taxes and with a countdown to general parliamentary election just 120 days away, who otherwise is even bothered in Delhi about the 4 seats that Himachal contributes to the Lok Sabha to make them take the case for any pre-poll doles for the state seriously enough.

Where the state finances continue to sink deeper into debt which currently is over Rs 30,000 crore and counting, it was only on 3 December, 2013 that Reserve Bank of India auctioned a 10 year Rs 300 crore Himachal Pradesh state loan at 9.32 percent cut-off yield.

While the states expenditures on salaries, pensions, interest payments, social and food security continue to balloon up, the show of opulence that the government and administration puts up is like the proverbial ostrich with its head in the sand.

Highly sensitive to inflation, the ministers, speaker, deputy speaker, chief parliamentary secretaries, MLAs et al without any dissent were the first ones to gift themselves a pay hike in the last assembly session.

All or anybody in the executive position has improved his status by drawing upon the state exchequer to buy a swanky new sedan car, be it a minister, a secretary or a chairman of a god forsaken loss making public sector undertaking.

It was only criticism in the media that deterred the chief minister to settling for fuel guzzling Toyota Fortuners, one for the boss and another two for pilot and security staff, rather than the highly expensive Mercedes Benz that was earlier proposed.

What is only adding to the woes is re-employment of high wage earning retired babus, complete with all paraphernalia, subsidized housing, chauffer driven cars, battery of peon’s et al.

Rising per capita incomes and rising number of people living below poverty line

The state figures high on development indices be it per capita income, health indices or the high literacy rates. The state has taken strides, so is the reading of planning commission and other independent surveying agencies.

Relying on the data the 14th Finance Commission chairman YV Reddy was carrying into a meeting with state economy specialists about 2 months ago where the state was making a case for larger grants, the chairman simply countered, Why Himachal ???? – Where many other states in the country are much lower on the development indices.

“And if we give you more, whose share do we cut,” Reddy is reported to have questioned the state government officials.

The indices have not gone unquestioned either. A state with a per capita income of around Rs 90,000 per annum would make a family of 5 with an annual income of Rs 4.5 lakh comfortably fit into a lower middle income group.

But those tracking the per capita charts reveal that if you remove the about 3 lakh government employees from accounting the per capita calculations, the per capita income of the balance 65 lakh people in the state drops to around Rs 55,000/- only. And if you remove the rich Apple belt, the per captia incomes for the rest drop even further.

The sharp divide is only too obvious that the politician with the ear to the ground and the hawked eyed administrators choose to ignore.

Himachal being the least urbanized state (only about 10 %) in the country, the sharp disparity is only too visible.

Soon after presenting one budget in the state assembly, when former chief minister Prem Kumar Dhumal was questioned about the queer logic of the states rising per capita income and also the rising number of people living below poverty line, no answer came forth.

Having ducked the question, the chief secretary and the finance secretary were left fumbling for an answer, which was not convincing at all.

Unable to raise more taxes on an impoverished rural population or enforce a wage freeze or wage cut on government employees, the debt trap is only forcing the state to go for distress sales of its water sources.

Without considering the needs of the rural populace, much of the flowing water assets stand privatized by selling them to power producing companies.

Sensing a loss of livelihood, the farming community is up in arms against the company that attempts to set shop on the stream or river. Water wars are being fought in many villages across Himachal.

Literacy rates have improved but the quality of formal education imparted is at its lowest. The government spends upwards of Rs 2500 crore on state funded education and has a standing manpower of about 1 lakh teachers at school level.

Only two days ago, the Himachal Pradesh High Court sought an explanation from the state government about how the government was be-fooling the people by upgrading school institutions without adding any new infrastructure.

Where robbing Peter to pay Paul or begging before Delhi Durbar for special grants or calamity relief is not helping to tide over the financial crisis at hand, in undertones there is talk of raising retirement age to 60 if not 62.

The reasoning being that the government would be able to tide over the immediate payment crisis for retirees, in terms of gratuity, pension and other permissible allowances.

And if the retirement age is raised to 62, the coming financial crunch is postponed to the next government, and the current one can breathe easy for rest of the term.

It is a different matter if the live unemployment figures is currently at over 8,50,000(about 13% of population base).

There is not enough money in the kitty to dole out unemployment allowances or to put it in better language – skill development allowance to such a big army of unemployed lying around.

Populist policies have left a rich Punjab with a poor government but in case of Himachal Pradesh it would soon be a poor defenseless people with a poorer government.

5 Comments

As the story goes in Greek mythology, Cumaean Sybil, a beautiful witch, an enchantress of her times, asked the God King Apollo for eternal life. He granted her, but she forgot to ask for the eternal youth. A thousand year later, she lived on, but became more decrepit, diminished to just one feet creature, put out in a bucket for a public show. When the boys mocked her and asked “Sybil, what do you want?” Sybil said “I want to die.”
Such is the fate of 4 or 5 MP states which have no Godfather in the Centre. Compare these with the sick, parasitic BIMARU states which alone command over 180 seats in Parliament!
Talk of numbers here. It takes more than 10 Himachals to stand up to West Bengal which has cornered 49 Railways projects to itself in just one session, and is counting. And where is your Bilaspur railway line project? Just one example! Where are you? Can it ever happen?
But then, there is also a critical difference. Uttrakhand, too, has just 5 seats. In my more than a decade of loitering in corridors of power, and supping with the influentials and consequentials, I found this state still commands a very well-entrenched lobby of Uttrakhandi paharis everywhere in Delhi – the bureaucracy, the administration, intelligentsia, media, political advisers, thinktanks and the last but NEVER EVER the least, a vast clerkdom – the Lord of the Files – here, there, and everywhere. So whosoever thought there was the impromptu upsurge of deluge of compassion that huge financial aid to Uttrakhand flood was on the spur of some emotional moment is hugely mistaken… Uttrakhandi lobby was at its best.
So where are himachalis in Centre? Far and few between! The one Sharmaji we have here in Congress in Delhi is not only default political enemy of BJP, but also sworn detractor of the Congress ruler in Himachal!
And to get any indication of unemployment in Himachal, just look at the number of distress letters to editor of this site, querying about some job. Something which I have not seen on any other regional website.

This article is a timely reminder of the profligacy indulged in by all past and present governments.Actually, the per capita income the state proudly boasts of is a contrived mirage and is completely distorted. Not only is its distributive aspect suspect( as Mr. Makhaik rightly points out), it is also padded: if we deduct the central plan assistance and the borrowings of the govt.( neither of these is the genuine income of the state and both can dry up at any time) the per capita income will come down by Rs. 10,000/.On a pro rata basis we have the highest number of govt. employees in the country and probably the highest paid too. Just to put this in perspective, with 0.5% of the country’s population we host 3% of the country’s IAS officers!The same holds true down the line.Unless the state govt. can muster up the courage and will to rationalise and downsize its staff at all levels we might as well have the begging bowl as the state symbol.Any economist will tell you that just as bad money( which gives no returns to the state) crowds out good money in the economy, similarly, govt. jobs( which are the least productive)crowd out private sector employment.And that in a nutshell is the monkey on the government’s back.

Great article. We do not have any jobs whatsoever here, himachali youths are leaving state to work inDelhi/chandigarh on pittance. Thing is himachali intelligentsia understands this issue but I do not think there is any solution to this problem. Incomes from Horticulture has stagnated. There is not much scope for industries.Even in army now recruitment is on basis of state wise quota. I think in nearby future Himachal Government is going to default in payment of salaries of employees. that would be something which will jostle our people out of slumber.